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Serco U-turn over environmental services sell-off

Outsourcing giant Serco has reversed a decision to sell its local authority waste and recycling division, and is optimistic over growth in the UK resources market.

A company statement revealed it has “a strong pipeline of opportunities” lined up for its environmental services.

This overturns an announcement In December 2014 that the company would divest “non-core” services, including local authority environmental and leisure for a deal rumoured to be worth around £75m.

The decision was taken in order to protect the company’s dwindling income. Serco expects to see revenue drop by around £300m following the sale of its India-based call centre business.

Serco currently has waste and recycling contracts with 17 UK councils including Havering, Bexley, Canterbury and Breckland. Its environmental services division, which includes recycling, street cleaning and vehicle maintenance, has a £1.5bn order book.

The statement said the division had “continued to perform well both financially and operationally”.

A spokesperson added a review had revealed “good prospects” within the UK resources market.

Liz Benison, chief executive of Serco’s UK & Europe, local and regional government business, said: “Our leisure and environmental services businesses add real value to our wider work with UK local government.

”In light of their strong operational and financial performance, it makes sense to retain them within our existing portfolio.

“I’m pleased that our decision ends a period of uncertainty for both our people and customers, whom I’d like to thank for their ongoing support over the past year.”

Serco Group Plc’s share price has been on a downward trend for the majority of the year.

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